Fuel Costs

Jim McGovern Excerpts

Monday 7th February 2011 Commons Chamber

[Dr Whiteford]

I agree with the hon. Gentleman. I live in rural Aberdeenshire, and at this time of year, I fully appreciate the need for vehicles that are suitable for the roads on which they travel and the driving conditions.

There is a huge irony in this situation for people in my constituency, who have had an oil terminal on their doorstep for many years. People who live at the heart of Europe’s oil and gas industry pay among the highest prices for petrol and diesel in Europe. That irony is certainly not wasted on folk in my part of the world. Nearly 62% of what we pay at the pumps goes directly in tax and duty to the Treasury. My concern—this is the chief point that I want to make this evening—is that that is a disproportionate tax on people who live and work in rural and remote areas.

[Jim McGovern (Dundee West) (Lab)]

May I say that I am sorry, Madam Deputy Speaker, that I was not here at the beginning of the debate? I was in Dundee for the launch of the Scottish Affairs Committee inquiry into the video games industry. The hon. Lady is a member of that Committee, so I am sure she will understand.

Does the hon. Lady agree that while figures suggest that fuel duty puts 1p on the price of a litre of petrol or fuel, VAT puts somewhere in the region of 3p a litre on it? Should we not attack the coalition Government for increasing VAT instead of looking for fuel duty regulators? I see that she is being advised by her colleagues on that.

[Dr Whiteford]

Had the hon. Gentleman been here earlier, he would have heard that point addressed in previous contributions. Both VAT and duty have a part to play. The previous Government’s record on this was shameful in not allowing motorists to benefit from the falls in VAT at the beginning of the recession. The key point is that the disproportionate tax on rural parts of these islands does not only harm individual motorists, but inhibits our business growth and the development of our rural economies.

--- Later in debate ---

[Guy Opperman]

rose—

[Jim McGovern]

rose—

[Mr Weir]

I will not give way at the moment.

Many of my constituents have to travel to work, and they have no alternative to their car. There are bus services, but if we look at how people work today—many work split shifts and might have one or two jobs to make ends meet—we see that it is very difficult for them to get to their workplaces by bus. This places a great deal of pressure on family budgets. If we are talking about creating work and getting people back into it, we must make it easier for people to travel.

[Jim McGovern]

Will the hon. Gentleman give way on that point?

[Mr Weir]

I want to finish the point; I will give way to the hon. Gentleman in a moment.

As I mentioned in an intervention, The Guardian this morning features an article saying that bus routes are about to be slashed, and I understand that the rural bus rebate given to local authorities is also going to go. All that will cut back even further people’s ability to get to work by bus. I will now give way to the hon. Member for Dundee West (Jim McGovern) before he jumps up again.

[Jim McGovern]

I thank the hon. Gentleman for giving way. I must say first that I was disappointed that the hon. Member for Banff and Buchan (Dr Whiteford) criticised me for repeating a point and for not having been here earlier. I did explain why I was not here, but my main point is for the hon. Member for Angus (Mr Weir). I am sure he is aware that Stagecoach, a company owned by Brian Souter and one of the biggest donors to the Scottish National party, has said that the fuel price increases will help its business.

[Mr Weir]

The hon. Gentleman is bringing irrelevancies into this; we are talking about the real problems that rural areas face, and I am sorry that he does not understand that.

There is another problem with cars. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) made the point that many people in rural areas have old vehicles and cannot afford to buy new ones. That brings several problems. Those vehicles are not only less reliable, but use more petrol than modern vehicles do and cost more to maintain and more to run in road tax and other things. People are suffering seriously by having to travel to work by car.

The right hon. Member for Torfaen (Paul Murphy) talked about what the devolved Administrations could do. The devolved Scottish Administration have introduced a business bonus to help with the costs of running small businesses. The right hon. Gentleman mentioned the ending of the Severn bridge toll. There is a huge cost in fuel for transportation, which is really hitting small businesses.

The hon. Member for Argyll and Bute (Mr Reid) mentioned the green argument, and I would like to address some of the related issues. Strangely enough, I agreed with a lot of what he had to say—I shall surely not make a habit of it!—but it seems to me that there is nothing green about strangling local economies in rural areas. Some say that people can move on to drive electric cars. I would like to see an electric car that would take me around my Angus constituency, never mind Argyll or Caithness and Sutherland, but the range is simply not available.

[Jim McGovern]

Does the hon. Gentleman have time to give way again?

[Mr Weir]

No, I do not.

There are real problems with fuel prices and they are strangling business in rural areas. They are an attack not only on the business itself, but on the family budget.

The hon. Member for Alyn and Deeside (Mark Tami), who is no longer in his place, mentioned home fuel oil. I appreciate that it is taxed differently from petrol, so it is a different issue, but he is quite correct to say that throughout rural Scotland, the escalating price of home fuel oil—used in many hard-to-treat homes that are otherwise unable to get central heating or any heating at all—is a huge problem, which is also hitting many people. These costs are devastating the rural economy.

The right hon. Member for Torfaen also mentioned supermarkets giving discounts on petrol, but in some ways that is a somewhat insidious practice. The Minister talked about people going to petrol stations, but in many rural areas such stations have ceased to exist. One of the hidden costs of living in rural areas is that people often have to travel many miles to fill up their vehicles with petrol in the first place. Cars cannot be driven right until the orange light comes on; if they are, they are unlikely to get to a petrol station for a fill-up and will be stranded somewhere along the line. If supermarkets offer discounts, people travel long distances to get there to fill up their cars, which has a knock-on effect on business in rural areas.

The key point is that the fuel issue is at the centre of the rural economy. Unless we sort this problem out, there will be no rural economy. We will not see a recovery of businesses that are strangled by rising fuel prices. Businesses will not survive for much longer if the price continues to rise as it has recently.

I think it was the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) who talked about the Barnett formula. Frankly, that is completely irrelevant to this argument. If we had a fuel duty stabiliser, it would apply throughout the country. [Interruption.] The hon. and learned Gentleman is thinking about the derogation, which is a completely different matter: we are talking about two different systems here.

We have pushed for a fuel duty stabiliser to give certainty about the price, to allow hauliers, for example, to be able to quote in advance for a contract and know what the fuel prices are going to be. This will also allow people to look at their family budgets and know what they have to spend to get to work on a weekly or monthly basis. We need to remember that our constituents are not getting pay rises—in some cases, they are getting pay cuts—so they cannot cope with these rising prices, which impact directly on family budgets. For all those reasons, we need action now. It is all very well to talk about the problem and to look at the practicalities, but if this drags on into next year, I am afraid that many businesses will fail to survive.